Turnbull’s (fibre) optics problem

Forget the ever-escalating cost of the NBN.
Malcolm Turnbull
can’t afford the personal cost of being defined as a politician who breaks promises. So he needs all the help he can get to explain why he can’t meet his pre-election commitment to have most Australians getting broadband speeds of at least 25 megabits per second by 2016.

Fortunately, the strategic review of the national broadband network, released on Thursday, provides the Communications Minister with 134 pages of ammunition.

But in terms of politics, detailed figures and timelines for the NBN matter less than being able to create the impression the government’s approach makes more sense.

Turnbull needs to persuade the public that Labor’s version of the NBN was not only far more expensive than estimated (requiring $73 billion v a supposed $44 billion) but would also take many years longer to deliver. As the minister regularly acknowledges, however, the concept of the NBN remains very popular despite the obvious problems with the project.

Malcolm Turnbull needs to persuade the public that Labor’s version of the NBN was not only far more expensive than estimated, but would also take many years longer to deliver.
Photo: Glenn Hunt

And given the general confusion about what’s happening in Canberra and Labor’s politically potent accusation the government is to blame for “losing" Holden, there is no leeway to allow any more doubts about its management of economic development and major infrastructure.

That means Turnbull has to demonstrate his version is still a smarter, faster way of delivering high-speed broadband to more people, more quickly.

He’s now saying that just under half of the population – 43 per cent – will have access to the promised minimum of 25 mbps by 2016 and nine out of ten Australians to at least 50 mbps by 2019.

Blame funding on Labor

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As to the new estimated funding requirements of $41 billion rather than the Coalition’s estimated $29.5 billion, that’s all the result of Labor’s “mess". Turnbull insists the project was in even worse shape with worse delays and costs built in than anyone could have realised looking from the outside and from opposition.

Not that Turnbull has ever been other than savagely critical of NBN Co’s performance. He describes as “complete utter madness" Labor’s decision to embark on the project in the way it did, meaning the government is lumbered with $15 billion of spending commitments locked in. That’s even though the rollout is only expected to have passed only 357,000 existing premises by June next year rather than the 1.3 million forecast in NBN Co’s corporate plan of August 2012. Of those, only 90,000 premises will be actively connected. It’s lucky that
Bill Morrow
, the new NBN Co chief executive, is a positive, energetic character and well-skilled in turnaround strategies from his time at various Vodafone businesses, including most recently in Australia. He’ll need all that optimism and experience to manage an organisation requiring radical change and much improved performance over the next few years.

Morrow hadn’t even had the chance to read the strategic review of NBN Co by the time his appointment was officially announced Thursday. But the American executive is also a good choice to explain the intricacies of telco jargon in an easily comprehensible way to people who will soon be demanding to know where “their" NBN is after all this time.

Long negotiations

According to the strategic review, what is now called a “multi-technology mix" means only around 26 per cent of premises will now get a fibre broadband connection all the way. Another 44 per cent will rely on a mix of fibre to the “node" or cabinets on street corner or basement with copper for the last few hundred metres.

This continued reliance on an aged copper network for the last part of the connection is now much more feasible than it was just a couple of years ago given the constant improvements in technology and thus the speeds available over copper.

The remaining 30 per cent of premises will use upgraded HFC cable that already runs past 3.4 million homes. Labor had planned to pay Telstra and Optus to shut this cable access down as a way of delivering broadband. This was in order to avoid competition for what was always an absurdly unrealistic business case for NBN Co.

The Turnbull view, strongly backed by his new chairman
Ziggy Switkowski
, that it is wasteful to over-build valuable cable infrastructure already capable of delivering 100 mbps to so many people at a much reduced cost to building new connections.

Switkowski says upgraded cable will be able to provide a multiple of those speeds within a few years. He also suggests it makes sense for NBN Co to acquire the cable as the wholesale supplier of broadband but he has yet to discuss this with Telstra and Optus. Imagine how long those negotiations might take!

Not that Switkowski or Turnbull suggest there will be any more money than the $29.5 billion pledged by the Coalition last April. The plan is to rely on debt to make up the $11.5 billion difference with the latest estimate of $44 billion in funding required.

According to Switkowski, this will be an issue for later in the decade when the terms on which NBN Co can borrow will be clearer as the revenue stream will be more certain.

The government’s response to the strategic review, he says, should be a version of “good job, try harder" because the numbers still aren’t good enough. Quite.